Wynnstay Group Plc (WYN) Earnings Call Transcript & Summary

Welcome to the Wynnstay Group Interim Results Webinar. [Operator Instructions] This webinar is being recorded. I now hand over to Steve Ellwood, Executive Chairman; and Rob Thomas, Group Finance Director. Steve, over to you.

Thank you, and welcome to everybody, and thank you for your interest in Wynnstay and half yearly presentation. I should start by saying that I'm the Executive Chairman. And in the absence of Gareth Davies, our CEO, I'm now more involved in the business than historically. Gareth is on a compassionate leave of absence. And during that period, the leadership of the business has been taken on by myself and by Rob. And there's no really ambiguity in the business. Rob is leading it on a day-to-day basis and the senior executive team are reporting into Rob. And I should say that, that executive team is all long-serving experience and giving us both a great deal of support. So on that basis, I'd like to start off the presentation for you and to give you an overview of the first half performance. And I'll start by saying, as we quite often do in Wynnstay presentations with the weather, which has been a particularly challenging set of weather conditions since the autumn of last year through into the spring of this year, we had a very wet autumn which did delay the planting and indeed postpone planting a quite a lot of autumn cereal crops. And there was, therefore, a need for a much bigger level of planting of crops this spring. Sadly, we also had a very wet spring, which meant that the planting of those spring crops was delayed. Pleasingly, most of the field work is now being done. But one of the impacts of this is that some of the income that we might have expected from seed sales and from fertilizer sales has been pushed back by 3 weeks or 4 weeks, and that means it's going to be reported in the second half of our financial results. We've also had a period where farmer sentiment has been a little weaker, combination of [ outfarm ] prices and also a little uncertainty in terms of government policy and support for the industry. [ Outfarm ] prices were weak in dairy and in cereal arable crops, and in fact, eggs and Red meat were a little stronger. Sentiment around our policy really related to 2 things as we came into this first half period, one of which was new policies, which created a level of uncertainty, as you might expect, but also an expectation that the replacement of direct support with these policies aimed at getting environmental gains would lead to a net reduction in income. Since then, I guess we've all got a little more used to the policies and some of the levels of support payments, especially in England have been increased to the point where farmers see them as quite an attractive commercial alternative in some areas. And then the third significant impact on our trading performance was a reduction in commodity prices during this period. And where we manufacture product, and this would be in feed, but more especially in this context, with fertilizer, we need to hold stocks to be able to continue our manufacturing process in an efficient fashion, and then holding those stocks and watching the commodity price fall, you inevitably are required to follow the market down and therefore, incur lower margins or indeed modest losses on the stock as you replenish. We've been through that process and as we'll explain later on, we feel the prospects for our fertilizer blending activities are actually pretty strong for the second half.

Thanks, Steve, and hello, everybody. Notwithstanding the falling commodity impact on margins in fertilizer, the unit margins have broadly been maintained across our group. And what we've seen is that margin has improved within our feed business and also within our depot business as well. And that's been a positive management action, which has offset increases we saw in labor, distribution, packaging and also energy costs in the first half of the year. We've also got some efficiency initiatives that are ongoing within the business that have helped offset those inflationary impacts. And so across the business, our overheads have been slightly lower than the first half of FY '24 compared to the first half of 2023. Our investment programs across the group are on track. We extended our feed manufacturing capacity at Carmarthen Mill by commissioning the first phase of our investment project there in January. That has led to an improved outloading process of the milk, which means we can load vehicles quicker and turn them around in a more time-efficient manner, which improves our efficiency. As you may be aware, we've got a multiyear, multimillion pound solar panel installation project, which we're putting in across the group. We completed the first phase of that last year. That was a spend of just under GBP 1 million, and we've begun the second phase this financial year. That's really positive because it's starting to see solar panels being implemented at our feed mills, which are our highest energy use assets within the business. I'm also very pleased that we're now entering the summer period where daylight hours are longer, and we're starting to see the full benefit of those investments coming through into the business. We have a strong financial position. Our balance sheet has generated good cash flows, and we have a net cash position of GBP 18.5 million at the half year. This provides a really good platform to support our investment in growth plans, and we can use that to drive our strategic initiatives and development at the group going forward. And importantly, in our overview, we are maintaining our expectations for the full year. Whilst that might be slightly more loaded to the second half than we've seen in recent years, it is underpinned by some really good trading that we saw in April and May. We have seen some weather deferred sales, particularly within the arable sector come through in May and June. We've also got a more optimistic outlook for farmgate prices, particularly milk prices, which are rising and a forecast to rise further in the second half of the year. We also have some good forward positions within our grain trading book. That's where we've sold grain and already covered in the purchases to lock in a margin that will materialize in the second half of the year, and we've got a strong order book within our fertilizer business.

Great, Rob. I thought it might be helpful at this stage to just give you an overview of the business structure. And probably the best way to explain this is that Wynnstay been operating for something like 106 years. And this structure reflects the development of the business over that period of time with lots of accretive acquisitions being brought into the business, and I'll explain 2 or 3 of those as we go through this. At its heart, Wynnstay is a manufacturer and distributor of agricultural products, so an agricultural merchant in many ways. We have a significant feed business that manufactures feed for ruminants and for poultry, and we have a number of mills doing that for us from the historic start of Wynnstay at [ Llansantffraid ], through 2 acquisitions in South Wales and more latterly in the Southwest in Wiltshire. We also have a significant trading business that trades feed raw materials, primarily between farmers and the next stage in the food chain. Our arable business, also merchants, arable products, it processes both cereal seeds and grass seeds and it sells fertilizer and agricultural chemicals. In addition to this, we have a grain trading business, grain marketing business that was acquired some years ago where we are buying grain from farmers and selling to both animal feed manufacturers and into the human food chain for flower and eventually into bread, et cetera. And then the final element of our agricultural division is the Glasson business based up in Lancaster. This business is based around the Glasson dock. It's traditionally imported feed materials and sold them into the trade in the northwest of England. It also manufactures some of those into specialist feed products. And then finally, there's a fertilizer blending activity with sites now across most of the U.K. and up into Scotland. That business has grown pretty significantly over the period and is now the major element of Glasson, which is a standalone subsidiary of the overall group. And then the second division that we have is the specialist agricultural merchanting division. And this is the 53 depots that Wynnstay owns from Helston in Cornwall to Kendal in Cumbria. So going up all of the west side of England and into Wales. There are 53 depots there. And then we have 3 depots under the Yums brand, which sells more especially into the equine market. And just to give you a flavor, we say there's been lots of accretive purchases of depot businesses over the years, and these would look much more like [ builders merchants ] than they would a fashion or a retail store. They're very much about getting products from either our manufacturing or those that we've acquired to our farming customers.

Moving on then to our financial highlights in the first half of the year. Our revenue has reduced. We have seen a commodity price deflationary trend compared to last year. And as you may be aware, our revenue does amplify some of those trends and often that can mask or exaggerate the underlying performance of the business. So of the GBP 80 million reduction in revenue, GBP 69 million or 86% was arising due to commodity price deflation. Because we operate an absolute unit cost model, we often think that gross profit is a better indicator of our underlying business performance. So gross profit did reduce by GBP 1.5 million, and that has reflected lower activity primarily within the arable sector, where wet weather has deferred application of fertilizers and planting of spring cereals. Unit margins have been broadly maintained across product categories, as I've mentioned. So it is really activity that has driven that reduction. As I mentioned previously, we did see a slight improvement in overheads relative to the previous year. So the reduction in profit before tax, which is our key performance indicator on a financial basis, was a reduction of GBP 1.2 million. So we delivered an adjusted PBT of GBP 4.8 million versus GBP 6 million in the first half of 2023. That profit translates to a basic earnings per share of GBP 14.31 per share. Net cash of GBP 18.5 million compares to a net debt of GBP 7.3 million in April 2023. The year-on-year cash generation has benefited from price deflation as well. What we find is that in a deflationary environment where we're holding stocks, the cost of those stocks to hold is less, and we realized cash from period to period. It's also really pleasing to see net cash at this time of the year. Our annual group working capital requirement is typically at its peak in April. To have cash reserves at this point is very pleasing and is, as I mentioned, a really good platform for development of the group. So really in light of the financial performance and confidence in the second half as well as that balance sheet strength, we have slightly increased our interim dividend by 1.8%. So we're going to declare an interim dividend of 5.6p per share. Obviously, the significant weighting of dividends is in the second half of the year. And on the basis of our expected outturn, we are forecasting to maintain the progressive dividend policy that we've seen over the years, as you can see on the chart there in the bottom right corner. Since we've listed on AIM, just over 20 years ago, we have increased the dividend each year during that time we've been listed. Looking in a little bit more detail on the profit and loss account. The bar charts on the right do show those impacts in revenue and gross profit that I talked about in the highlights section. So as you can see, commodity price deflation has been the key driver to our revenue reduction with some activity-based reduction as well. And then in terms of the gross profit of GBP 40.2 million, again, activity, primarily in arable activities has reduced our gross profit with unit margins broadly in line year-to-year. On a segmental basis, our operating profit within agriculture was GBP 1.3 million. That was reduced from GBP 2.3 million at April 2023. And the reduction coming through from arable activities where sales have been delayed or deferred into the second half of the year. It was pleasing to see a robust performance within the specialist merchanting division, our depot business, which delivered an operating profit of GBP 3.3 million versus GBP 3.4 million in the previous half. The inflation-driven increase to overheads have largely been offset and our net finance cost and joint venture contributions are broadly in line from year-to-year. The key trends within the balance sheet have been the reduction in working capital as commodity deflation has continued. I would say that I believe we're now at a normalized level of input pricing compared to April 2021. As a recap, we saw inflation come through in financial year 2022, primarily within fertilizer raw materials. That's now unwound and I'd say we're on a like-for-like basis across a broad range of commodity inputs compared to where we were in April 2021. In the last 12 months, that has led to a cash working capital reduction of around GBP 24 million. And the net assets are at a record high of GBP 136.3 million, that equates to [ GBP 5.91 ] per share. So as I'm sure many of you are aware, we are an asset-backed business. Key points to pull out on the cash flow. The first half does represent the peak group working capital requirements. So there has been an outflow of cash relative to the year-end position that we reported in October 2023, and that does reflect our position as a producer. So we do carry forward [ bought ] raw materials, and that's ahead of our peak trading periods for feed, which is in March and fertilizer blending, which is normally in spring, albeit that has been deferred slightly into late spring and summer this financial year. Our annual CapEx spend is expected to be loaded to the second half of this year. That's due to the timing of certain development projects and maintenance CapEx within this particular reporting cycle. And relative to the first half to April 2023, we have slightly lower CapEx, primarily because the April '23 spend included a significant portion of investment as part of the Phase 1 of the Carmarthen expansion. Also as a recap, we have committed bank facilities of just over GBP 20 million, and that extends to May 2027. That consists of an overdraft and the revolving credit facility. So whilst we are in a net funds position at this particular point in time, we have seen previously the impacts that inflation can have on the working capital of this business. And we do see that having a prudent funding strategy and committed facilities is the right thing to ensure we have both development opportunity, but also we can provide a buffer to any working capital demands on the business. The charts on this slide show the evolution of net debt to net cash over the 12-month period. So profitability and EBITDA conversion to cash, the working capital benefit that I've talked about. And then in terms of deployment of funds, interest and tax requirements offset by dividends we received from our joint ventures, dividends that we have paid to our own shareholders of around GBP 4 million and underlying net CapEx spend over a 12-month period of GBP 3.2 million. We think that would represent a broad CapEx spend for the current financial year, and GBP 5.4 million of lease payments and that relates to property leases across our depot network and physical locations as well as leases for [ HGV ] and commercial vehicles. We have 116 commercial vehicles across the fleet, and we will put [ 20 ] from those through higher purchase agreements. Our net cash and debt cycle over the 6 years since 2018 are shown below. The light blue line of best fit shows the increase in funding over that period. However, you can see particularly during the period of the inflationary environments, we have seen some volatility in the working capital or net cash debt cycle within our business. The positive thing for me is that the difference between October '23 and April '24 has shortened. And based on a level of forward pricing, we're confident that, that level should remain less volatile in the current environment. Pulled together a capital allocation framework slide. This is a fairly straightforward capital allocation framework, but it does give people an idea of where we look to deploy our capital. We're looking at the opportunities for continued further investment internally. That drives organic growth and better returns. So really here, this is projects to drive efficiencies, increase our capacities and extend our capabilities. Clearly, we want to undertake projects that generate an acceptable return on investment. But we also are keen on projects that reduce our carbon output and Steve will talk about our environmental targets later on in the presentation. We're looking to invest in additional growth opportunities, and that's primarily through acquisitions. We have a strong track record of integrating previous acquisitions. And we think we have a platform, both in terms of that integration model, but also a funding platform to drive acquisition activity into the future. Clearly, increasing our cash reserves to execute the above strategy is key. And as I mentioned, making sure we have appropriate working capital should commodity inflation recur is important to us. And finally, the sustainable and progressive dividend policy is a key part of our strategy. We have that growth track record. And based on our outturn, we are anticipating to maintain that going forward. We'll now talk through an operational overview of the divisions within Wynnstay, and I'll start by talking about our feed division within the agriculture division. We have seen a slight reduction in feed volumes in the first half of the year. This is in line with the national trends, where we've seen reductions primarily in dairy, which has been affected by a weaker milk price relative to where it was in the first half of 2023. Positively, we are seeing improvements in dairy prices and other farmgate inputs, and we expect those to improve throughout the second half of the year. As I mentioned, we finished the Phase 1 development of our Carmarthen feed mill. As a growth focus, there is a potential second phase of development. And that's where we would look to invest in an additional press line that could provide some increased capacity within our mill in the South Wales region. South Wales, as I'm sure many of you know, is a large dairy field with potential customers for Wynnstay, but it would also support the growth of our joint venture, Bibby Agriculture, which has a sales team that operates in South Wales. We're also appraising options for poultry feed manufacture. So as a recap, we bought the Humphrey's business in 2022. That currently manufactures poultry feed [indiscernible] mill in Twyford, where we have a lease that extends until 2026. When we bought the business, we also bought a mothball mill in Calne. The original plan was to redevelop that mill. As we reported to you previously, the cost of that refurbishment and transformation have increased, particularly following the invasion of Ukraine, which led to significant inflation that dramatically increased the cost of that investment. We now feel that it's unlikely we will redevelop Calne due to cost, albeit we have a plan to manufacture poultry feed, which we are currently assessing and that will provide a more than adequate base for the poultry feed manufacture, and we're looking at opportunities to develop our ruminant feed offering through the development of the Carmarthen facility. Other areas of growth focus within the feed business are on our on-farm nutritional advice. What we're seeing within farming, particularly livestock farming, is that a number of farmers is reducing. However, those that do remain are becoming bigger and are being more business-focused and professional. We think that having an on-farm nutritional advice offering can help to add value to those farmers. And with Wynnstay's market presence and customer relationships, we think that's a really good opportunity for us to drive our feed business forward.

Thank you, Rob. Now switching across to arable, another of the 3 elements of our agricultural division. We've talked already about the weather impacts on the first half and the fact that some of our sales have been pushed back into half 2. One of the consequence of this, I guess, is that we are expecting overall a smaller U.K. harvest this year and that we will return to a more normal autumn planting season. So more normal autumn planting season means the purchase of more seeds in the last month or 2 of our trading year, which will be positive. But we may find that we've got smaller volumes of grain to trade when we get into the following year. And talking of trading, our GrainLink operation had a record performance last year. This year, volumes are down fractionally, and margins have returned to closer to longer-term average levels. However, as Rob explained earlier, we know from sales that we already have booked and those sales are backed by purchases at an agreed price that we will deliver some significant margins in the second half, and those are pretty well locked in. Thinking of how this business might grow and develop from our own resources, well, GrainLink has continued to expand into the east of the country and Stuart Dolphin, who leads the business, has been very good at identifying individual traders who might well be suited to the Wynnstay way of doing things. And we have a couple of really good examples where that has made a material difference to the business. Search for new traders continues, and we hope that we will see a further increase in market share as time progresses. We're also aiming and expecting to deliver an increased share of the grass seed market, that being a reflection of the investment in facilities lastly 12 months or so ago. And then finally, a new area, which we might pick upon again later, is environmental seed mixes to fit in with some of the new government schemes and our [ grass seed ] plant is particularly well suited to producing those seed mixes. Moving on to Glasson. Glasson was probably the area of the business that was most significantly impacted by the deflationary trading environment but did put pressures on margin in the first few months of the year in quarter 1. However, I'm pleased to say that those have recovered into Q2, and they look to be strong for the remainder of the financial year, supported by some pre-bought fertilizer purchases for raw materials, but more importantly, a strong order book of sales. Spring season sales were impacted by the wet weather. But our fertilizer blending plants have been at full capacity for the last week of April throughout May and earlier into June. And that is a slight change in the normal phasing of activity within that part of the business. In terms of development of the fertilizer blending operations, there's 2 things I'd like to talk about, one of which is an efficiency opportunity that we've put into play in the second half of the year. On the East Coast, we have 2 plants, one at Howden, one at Goole. Howden is a satellite site of the Goole plant. We have the capacity at Goole to not only meet its own requirements, but those of Howden plus some headroom. So we've closed the Howden plant at a low cost. We've integrated its business into Goole. And that will lead to an earnings enhancing benefit in the second half of the year. We've also talked about the opportunity to grow our geographic spread within the fertilizer business. And that's based on current customers that we have who have a larger national presence. They are keen for us to increase our footprint. And we talked at the year-end presentation about a potential new site within the Southwest. That does remain a strategic priority, albeit the site that we were previously considering has fallen through. We are looking for suitable manufacturing locations where we can look to grow and enhance that business going forward. The other parts of the Glasson business are a feed manufacturing facility. That's a small part of the business. Its performance has improved on last year, but is slightly behind our plans. We also have a feed raw material trading operation. That's performed well and in line with its budget, whilst volume has been below the first half of last year, which is all in line with our Feed manufacturing output. Margins have been strong and costs have been controlled, which have driven a good performance. Lastly, moving on to our specialist agricultural merchanting division and particularly our 53 Wynnstay depots. Performance has been resilient. Revenue was lower, but our depot products were also impacted by price deflation. So if we adjust for that, sales were only [ 0.8% ] down year-on-year. And we think that's a really resilient performance in this marketplace. Farmer sentiment has impacted these sales. So often what we see is when the farmgate prices are under pressure or there's pressures on farmers in terms of weather conditions, they often take a prudent approach to expansionary CapEx on that farm. And that often does mean that they will spend less in Wynnstay depots. Also I'd note, we've seen that fencing materials have been down compared to where they were last year. And that's often, we believe a function where it's been wet, so you just can't do these projects on the farm because the conditions just don't lend themselves to it. Pleasingly, we've controlled inflation-driven overheads, and we've also increased margins to recover certain overhead increases. For example, where we've seen the cost of electricity across our operations increase, we've recovered that through some pricing initiatives. The growth of the business within the depot model is really around the evolution of how we sell, and we're looking at how we meet future farming needs over the short to medium term. And this is really looking at can we expand into our digital or online offerings. So it's very pleasing to see that we've developed our Click & Collect service, which has gone live in the first half of this year. Whilst online activities are a very small portion of how we currently trade, we believe that there is over the medium to long term a possibility of a shift into this area, albeit the physical depot network will be maintained a cornerstone of the Wynnstay offering and the way that we do business going forward. And with that in mind, staff training and development is a key part of our growth and development focus. As I mentioned before, as farmers grow, increase their professionalism and focus on value-add products within their own supply chains, we want to be well placed to add that value through specialist advice and advanced customer service within our depots. Thanks, Rob. Just a couple of slides now on environmental sustainability. And probably a good place to start is that for some time now, our mission has been explained as helping farmers to feed the U.K. in a more sustainable way. So clearly, sustainable impact is something that's been important to us for a long time. I got to look at this in 2 areas, the first of which is how we work with our farming customers to respond to changing policy needs and also to how they and their businesses impact upon their land, their soils and their environments. And then secondly, we'll talk a little about our own business and its impact on the environment. So firstly, looking at our farmers. We actually see this as a pretty significant area of opportunity for us. Changing farming practices will be required to fit in and to meet with the new environmental policies, and that will be the same whether we have the current or new government in a week or 10 days' time. And as this changing practice, then I think the need and the importance of external advice increases for farmers, and they do seem very knowledge hungry at this point in time. And we are already advising and supporting our farmers as they make some of these changes, and we continue to think and hopefully to implement in how best we can do that going forward. The one thing I'd say is that following all the lessons we've learned in providing advice and support to the dairy farming customers over the years, this is likely to be in the terms of specialist technical sales rather than in a consultancy type advisory service. We also see the opportunity for some new products. So environmental seed mix we've talked about earlier. We're also doing some very interesting collaborations with research institutes into feed additives that might reduce the amount of methane that's produced by ruminant animals and the consequential impact of that on global CO2. Turning on to our own company's impact on the environment and particularly on CO2 levels. We're conscious that we are a very heavy energy user, and therefore, our impact through CO2 is pretty significant. Like many large companies, we've got a clearly stated ambition to be net zero carbon in due course and for Wynnstay that means by 2040. In our annual accounting reports, you'll see all of the maths that goes back to round up establishing what our current levels of emissions are and what we need to do to get to net 0 within our good timetable. Where we are in terms of practical responses, I guess is, the first stage is picking off opportunities that we have to invest to produce energy, particularly electricity, renewable energy that would replace traditional forms of electricity, reduce our carbon output and give us a good return on that investment. Rob has already described the Phase 1 is complete and Phase 2 is well underway. That probably gets us towards the end of the easy pickings in terms of roof-based solar, but we are looking at other ways that we might harness solar to our advantage through perhaps building solar plants on land adjacent to our main energy users, primarily feed mills. We're also looking very closely at our vehicles, both the cars and the forklift truck fleet. And we see that, again, a phased renewal policy there, probably the enhanced renewal policy can bring good returns on that investment and reductions in carbon. But then the 2 big areas that we will have to respond to our HGV fleet and to the very energy-intensive mills that we have. HGVs, historically, we thought that, that was something that we would attack in its first phase by just the investment in newer vehicles that were more efficient in the general sense. But there's an increasing interest in biogas and whether we can find ways of working with biogas on our fleet to get good returns on our investments and also to reduce carbon score further. So I guess we've started on our journey with some way to go, but there is an intent and the focus, and we think that we can achieve this with returns on our investment as well. So moving on to kind of probably the final element of the presentation. I think we've given you an idea of how we might grow the business across many of the existing sectors. But I just wanted to take this opportunity really to remind you of the strategy that was set out some time ago and to reaffirm our determination to continue on a growth-based strategy. I mean that's not really surprising given that for the last 106 years, we've been buying and adding bits to the origins of Wynnstay both in terms of depots and manufacturing plants. And really, our strategy is not much more than a continuation of that, which has served us, our customers, and we believe our shareholders well over many years. But what I would say is different is that we are now particularly well placed to make further acquisitions. We've got, as Rob described, strong balance sheet with cash. We've got an industry where the benefits of consolidation seem pretty apparent, and we believe that we will be able to grow our business and in that process, probably make our balance sheet a little more efficient on the returns to our shareholders benefit through that process. The difficulty with all this, of course, is that if you're trying to buy existing assets, then 2 things, one of which you can only buy them when someone wants to sell. And then, of course, we have to buy them at a price which will be earnings positive across the whole business. We still feel that those opportunities are out there, and we have a fair bit of energy, certainly, at a senior level, I'm devoting some time to this now in Gareth's absence of investigating and trying to nurture opportunities. And we hope that we'll be able to deliver that in the coming months or years. And then finally, I'm going to ask Rob to say a few words in terms of summarizing this and giving you a further summary of the outlook for the business in half 2 and beyond.

Thanks, Steve. So in summary, we believe we've delivered a resilient trading performance in a more challenging trading environment. We've got a strong balance sheet and cash flows which support internal investments to grow the group and also provide a really good platform for our mergers and acquisition strategy. We are well positioned to achieve our full year performance in line with market expectations. And we've got confidence that the second half will be able to deliver the performance we need to achieve that. And finally, we believe the strong fundamentals in British farming, the transition to sustainable agriculture methods are underway, customers, farmers are starting to understand how government policy may support that. And we believe that Wynnstay is a well-established supply within that market space, a trusted supplier to those farming customers with a strong balance sheet, provides firm platforms for growth and longer-term growth of both the industry and the Wynnstay business as part of that. So that concludes the presentation. We'd now like to open it up to any questions that you may have.

[Operator Instructions] The first question is, can you explain the joint venture? I may have missed any explanation.

Okay. We've got 3 joint ventures. We've got a joint venture in a feed sales business called Bibby Agriculture Limited. That's a joint venture between Wynnstay and the Billington Group. That's a sales team that operates in Wales. It's supplied by Carr's Billington Agriculture in the North Wales and from Wynnstay now in Carmarthen mill and in South Wales. And the contribution from that business has been particularly strong over the last 3 years to 4 years. The business had a record year last year, and it's obviously core and in line with our core strategic operations. We do have a couple of smaller joint ventures. One is a property or housebuilding business called Wyro Green Homes. Historically, that was used to develop out the land bank that Wynnstay had built up over a number of years, and that's continued to provide profits to the group. And we have a small joint venture called Total Angling, which is retail-based angling supplies business.

Great. So if a Labor government is elected next week, do you think it will make a difference to farmers and your sector?

I'll pick up on that one. So I think if you look at the manifestos of all the major parties, really then the emphasis on productive agriculture is very, very limited. And so we're not expecting any significant changes in policy that would have an immediate impact on agriculture or on our customers. And I think perhaps equally important to point out is that if you look at some of the biggest factors on agricultural incomes over the years, then it would be general economic factors that made the biggest difference. So specifically, I think exchange rates and a weaker pound generally makes U.K. farming more profitable and interest rates. And so I think it will be the economic policy to those parties that make a difference, and that's something that's likely to unfold over a period of time.

Great. And I know you alluded to the working capital cycle. But can you explain the annual cycle? And do you expect the group's net cash position at the year-end to be higher than the prior year?

Yes, so, throughout the 12-month period, we do see different demands on the working capital of the group. So because we have to buy forward, we have to take delivery of materials before we can sell them. That does mean that we have to spend money to buy ahead of realizing the cash. And the way that the timing of that falls is that we have to pay for feed raw materials at their peak and fertilizer raw materials at their peak requirement, just before the half year. So that means that our cash balances are normally at their lowest point in the cycle in March into April. During May and June, we collect the cash that those production and sales generate, and we continue to generate profitable cash through the second half of the year, such that our position in October is normally the peak cash in that cycle. And yes, we are expecting that based on the working capital benefit we saw in the first half of this year, combined with positive trading in the second half that our cash balances will be higher at October '24 relative to where they were at October 2023.

Great. And talking about the share register, has there been any significant rotation of it over the period?

So if we look at our share register year-to-year, we've got a combination of institutional holders and also a lot of traditional well farming shareholders. We actually have a lot of people who are both employees, customers, suppliers and also shareholders as well. And what we've seen over that particular period is that we've had consistency in our shareholding positions. I believe we've got a lot of long-standing and supportive shareholders. But we have seen a few new entrants into the register over the 12-month period, albeit at a lower level.

Great. Will properties be revalued after recent investments?

So properties that we have, we don't have a policy of revaluing our properties, properties that we own are measured at historical costs on the balance sheet. And interestingly, that is an element of a lot of unlocked potential value within the Wynnstay balance sheet. If we look at our mill in Llansantffraid, that's based on the cost of the business back in the 1950s. So there clearly would be a higher level of value in that value today. However, we don't make a revaluation. What we do have to do is if we want to acquire a business, we have to undertake evaluation on the property that comes with that. So for example, if we bought a business with a feed mill or assets, we'd have to value those. If we buy a depot-based business, we'd have to perform a valuation there if it came with a property asset. But no, as a general rule, we don't have a policy of making an annual revaluation of properties on our balance sheet.

And does the Woodsmith Mine mothballing make any difference to the company for the future?

Sorry, you're going to have to ask that one again, quiet pick of audio. Which mine were you describing? Woodsmith, I don't know whether that's the right, that's what the asker has written. I'm just trying to reference whether that's correct. I'm presuming that's phosphate or potash, but genuinely, I don't know. But I'll answer the question in relation to raw materials for our fertilizer blending plant and say that the cost of raw materials, we would not expect that in the overall term to necessarily impact upon the margins that we make. But clearly, the more expensive those materials become, it does dampen demand from our farming customers and so volume might follow. At this point in time, though, we see the general principle in the way the agriculturists are buying their fertilize is that there's been a reduction in the amount of nitrogen fertilizer that's used and a commensurate which you're looking for increased level of importance, but on phosphate, potash and other ingredients. So frankly, I can't answer the comment directly. But if it is a phosphate or potash mine, that would be my view.

It's the Anglo American mine in North Yorkshire.

Yes, okay. [indiscernible], I think certainly on the coast there. Yes. No, so the comments will remain the same...

Great. And in terms of geographical exposure, is it true to say that you still have quite a strong Wales and West England bias that could be evolved?

Yes. I'll go. Rob might have some comments on this as well. And the answer is yes, if you look at in the presentation in terms of the supplementary pages, it shows us the distribution of our depot network. And our business has historically been for livestock farmers or for arable farmers with a livestock interest. And that's been a very happy ground for us to be operating in. And we would anticipate if we're going to make significant gains. It's likely to be the extreme northern south of that geography. We have some expansion into Eastern Counties in arable, most particularly in the grain trading activities in GrainLink but also to a lesser extent with some seeds and arable merchanting operations. So yes, we see it. We don't see ourselves as especially well placed to move straight across to the East and trying to take on some of the established agriculture merchants that are operating there, but we see areas where we have some advantage or certainly competitive position, and that would primarily be in grain trading at Wynnstay.

Rob, did you have anything to add?

No, I'd just echo what Steve said. And the opportunity for us is that where we can utilize the Wynnstay model into new geographic areas. That's clearly a benefit. So manufacturing operations with a depot network, potentially lucrative areas, Northwest, Southwest. And as Steve mentioned, in terms of that grain operation on the East Coast side, primarily a more less asset-intensive but more people-based offering in those regions.

Great. And that's the end of questions. Steve or Rob, do you have any closing remarks?

I like just to say that we've enjoyed talking to ourselves and hopefully other people have been listening as well. But we are really grateful for the interest that's been shown in Wynnstay. Rob and I are leading a great team, and we hope that we can continue to grow and develop the business over the coming weeks and months and that our shareholders will be rewarded and that the industry that we serve will continue to provide sustainable food for the U.K. population.

Tremendous. Many thanks, indeed to you both. And to everyone listening, you'll now be taken to a web page to give feedback on today's presentation. If you can't complete it now, you'll get a follow-up e-mail later. We would be really grateful if you could take a few minutes to complete. Many thanks for joining. This is the end of the webinar.